HUL Q1 results: Brokerages bullish on FMCG major after strong earnings; should you buy?

Shares of Hindustan Unilever Limited (HUL) jumped nearly two per cent in intraday trade on Wednesday, a day after the FMCG (Fast Moving Consumer Goods) giant reported strong results in the April-June quarter. HUL had reported a strong set of 1QFY23 results, with volume growth of 6% and top-line growth of 19.5%.  

Post strong earnings, which saw the FMCG firm beating the street's estimates, global and domestic brokerages are bullish on the FMCG counter.  

CLSA was of the view that though strong topline aids were overall beat, however, gradual recovery in margin can be expected from Q3.  

Saying that premium products continue to do better, it remains one of preferred picks in the staples, it maintained an outperform rating with a target price of Rs 2660.  

Jefferies maintained a buy call and raised target price from Rs 2810 to Rs 3000.  

CITI and HSBC too maintained a 'Buy' on the FMCG counter for target prices of Rs 2910 and Rs 3000 per share. The previous target prices set by CITI and HSBC were Rs 2480 and Rs 2810.  

JP Morgan increased the target price of HUL from Rs 2400 to Rs 2800 per share. The brokerage maintained an overweight call on the stock.  

Margin was well managed, despite sharp inflationary pressures, with margin contraction limited to 61bps, said IIFL Securities while assigned an 'add' for target price of Rs 2700 in 12 months. 

Motilal Oswal says HUL sales and volumes were ahead of its expectations in 1QFY23 but gross profit, EBITDA, PBT and PAT were broadly in line. 

"While the pace of earnings recovery to double digit and then mid-teens will be gradual, improving narrative will keep multiples high for the bellwether FMCG company," it said. 

The brokerage sees an upside of 30% from Tuesday's closing price. It reiterated a buy rating with a target price of Rs 3000.  

HUL Q1 FY23 resulst 

Hindustan Unilever Ltd on Tuesday reported an increase of 13.85 per cent in its consolidated net profit to Rs 2,391 crore for the first quarter ended June 2022, against a net profit of Rs 2,100 crore in the same quarter of the previous fiscal. The total income was up 20.36 per cent during the quarter under review at Rs 14,757 crore. It stood at Rs 12,260 crore in the corresponding period a year ago, Hindustan Unilever Ltd (HUL) said in a regulatory filing. Total expenses were higher 20.79 per cent at Rs 11,531 crore as compared to Rs 9,546 crore in the first quarter of last fiscal. 

"In an environment which remains challenging, marked by unprecedented inflation and consequential impact on consumption, we have delivered yet another quarter of robust topline and bottom-line performance," HUL CEO and Managing Director Sanjiv Mehta said.